The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications: Reply

We address how using different censoring thresholds and imputation procedures affects the baseline results of Coibion, Gorodnichenko, and Hong (2015). Higher censoring thresholds introduce measurement error and outliers that generate wide variability in results across weighting schemes, but methods...

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Bibliographic Details
Published in:The American economic review 2019-01, Vol.109 (1), p.314-324
Main Authors: Coibion, Olivier, Gorodnichenko, Yuriy, Hong, Gee Hee
Format: Article
Language:English
Subjects:
Bias
Business cycles
Imputing
Inflation
Price increases
Prices
Sales
Thresholds
Variability
Weighting
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Summary:We address how using different censoring thresholds and imputation procedures affects the baseline results of Coibion, Gorodnichenko, and Hong (2015). Higher censoring thresholds introduce measurement error and outliers that generate wide variability in results across weighting schemes, but methods that explicitly control for outliers confirm the results of Coibion, Gorodnichenko, and Hong (2015) for all censoring thresholds. We also illustrate how the BLS’s approach to imputing missing prices can introduce a cyclical bias into measures of posted price inflation when store-switching is present in the data.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20171338